In 1935, the Social Security Act was signed into law by President Franklin D. Roosevelt as a means of preventing elder poverty. Now, a little under a century later, the insurance program has amassed beneficiaries in the millions and these retirees often depend on their monthly benefit checks to be able to cover all of their basic living expenses.
Whilst the benefit amount a retiree will receive is determined in relation to what they had earned during their employment and paid into Social Security payroll taxes, the actual buying power of the benefit often differs from state to state due to varying costs of living. For instance, a retiree in one state could be receiving exactly the same amount in benefits monthly as that of a retiree in a different state, however, the first retiree may still require additional income to comfortably cover all expenses whilst the other retiree may not require as much additional income to survive.
As such, here are the states where a retiree cannot get the most bang for their buck, or rather benefit, as per a new report from Lending Tree.
How far can a Social Security benefit be stretched?
For 2025, the average benefit checks amounts to around $2,002 and this benefit check is a primary source of income for a significant portion of retirees. However, since factors such as costs of living, housing, or inflation can often differ based on location, some seniors may end up finding that this amount alone is not sufficient to cover all of their expenses.
Justice in Aging has found that, “Social Security lifts more than 22 million people out of poverty each year,” whilst Lending Tree has determined that, “Social Security covers roughly 30 percent of retirees’ spending” on average. However, as noted above, the city in which the retiree lives significantly factors in with the buying power of monthly benefit.
In the Lending Tree report, Matt Schulz, Lending Tree chief consumer finance analyst notes that, “Most aren’t fortunate enough to have a seven-figure nest egg or a pension to lean on. Most people have tight budgets, limited expendable income and low retirement account balances. It’s all going to add up to a challenging situation for retirees and their loved ones in the next 15 to 20 years.”
Which are the worst cities for Social Security benefits?
Social Security beneficiaries living in the following cities are likely to find that their monthly benefit does not stretch as far as it could in terms of covering expenses:
- San Francisco, California;
- Los Angeles, California;
- Washington, D.C.;
- Oxnard, California; and
- San Jose, California.
California in particular is infamous for its higher costs of living with retirees residing in San Francisco seeing an implied pretax need that amounts to as much as $85,364. Parallel to this, retirees residing in Los Angeles would still require around $83,414 during their retirement.
“It shouldn’t be surprising to see that Social Security doesn’t go very far in the biggest, most expensive cities in America,” Schulz said to Newsweek. “However, the fact that Social Security doesn’t cover more than about a third of spending costs in any big city in America is pretty sobering. It means no matter where you live, you better have a pension or some significant money set aside or retirement could be a major struggle financially.”
If costs of living continue to increase, experts are saying that states like California may no longer be a feasible location for seniors during their retirement and as such, they may be compelled to move away.
“Very few people can comfortably say they’ll have plenty of money to retire on regardless of what happens to Social Security,” Schulz noted in the report. “Knowing that, the more you can put into retirement savings and the longer you can do it, the better off you’ll be.”